Sun, May 08, 2005 - Page 10 News List

Oil prices rise despite abundant supply


World oil prices inched higher on Friday but came off peaks of US$52 a barrel following sharp increases in US crude inventories that suggested an easing of supply worries, dealers said.

New York's main contract, light sweet crude for delivery in June, added just US$0.13 to US$50.96 a barrel having at one point been as high as US$52.15.

In London, the price of Brent North Sea crude oil for delivery in June actually went down, ceding US$0.36 to close at US$50.77.

"Supply is abundant so prices sold off going into the closing," Refco analyst Marshall Steeves said.

He ascribed much of the late downturn to pre-weekend "short-covering" after the June New York contract had gone up US$0.70 on Thursday.

The market was still feeling the after-effects of figures released by the US Department of Energy on Wednesday that showed gasoline supplies for the week ending April 29 rose 2.2 million barrels to 213.5 million, comfortably beating market expectations.

US stocks of gasoline remain under scrutiny ahead of the traditional high-demand holiday period starting at the end of May -- when many Americans take to the open road.

"Oil prices are higher even though [US] inventories are going up," Williams de Broe analyst Richard Griffin said.

"The real test will be the gasoline stock level at the end of May," he added.

Oil prices dipped on Wednesday on news of the sharp weekly rise in US crude and gasoline stockpiles but rebounded as speculative traders took advantage of a volatile market.

Market watchers "said a failure to breach key support in the US$50 to US$50.50 range was bullish for Brent, though they doubted that a deeper seasonal decline had been completely halted," according to analysts at the Sucden brokerage firm.

Elsewhere, Nigerian President Olusegun Obasanjo said the subject of oil price concerns came up during talks with US President George W. Bush in Washington on Thursday.

Nigeria is the world's ninth leading oil producer and fourth within the Organization of Petroleum Exporting Countries (OPEC).

"Nigeria, alone by itself, cannot bring prices down. We have to work together in the OPEC," he said.

At its March meeting in Isfahan, Iran, the oil cartel raised its production ceiling by 500,000 barrels per day to 27.5 million barrels per day, and said a similar increase would be considered if high prices continued.

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